Triangle or Head & Shoulders? A little more about technical analysis patterns
According to the plan of our training course, we should move on to the study of technical indicators and their application, but the other day I came across an interesting chart, which makes me return to the topic of classical technical analysis and, in particular, to the uncertainty model. figure "Тrectangle".
The reversal power of the "Symmetrical Triangle" pattern
Analysts and stock coaches are often accused of showing only historical summaries. Today, we have the opportunity to observe the with the technical analysis figure "Triangle" in the dynamics.
In free access you can find articles substantiating the reversal power of the "Symmetrical Triangle" figure for Russian popular securities. I "made friends" with these figures a long time ago, back in December 2007. Back then, their classical perception made me buy Gazprom shares at 358 rubles... Of course, I got "stops", but it was a useful lesson: it not only turned my view of these figures upside down, but also formed a special approach to technical analysis.
In particular, the five-wave Symmetrical Triangle pattern warns me of a trend reversal, contrary to the classic scenario in the books. I don't give up thinking about a reversal until the securities pass the peak/bottom of the first wave. Therefore, when I came across the "Symmetrical Triangle" on young ALROSA securities, I decided to take a closer look at it and add it to my collection of worked-out figures by following the rate dynamics.
Upon reflection, I realized that my well known "Symmetrical Triangles" were born cleanly. The entry into them was after beautiful clear trends. And the "Triangle" on ALROSA seemed to have melted from the head-and-shoulders figures. "GIP" failed to break the neckline in due course and now promises a return, at least, to the annual peaks. So what - to cross out the scenario and draw the "Hound of the Baskervilles"? Let's make it easier: let's mark the resistance on the "Triangle" and look at it - 31.4 rubles.
So, the breakdown of the triangle resistance promises a hike, at least, to the peak of the year, and at most - will realize the effect of "Baskerville's Dog" and will take Alrosa quotes to the area of 41 rubles. A breakdown of the triangle support promises a fall, at least, to the support of 25 rubles (the height of the triangle base) and 23 rubles (the beginning of the first wave of the triangle).
Use the MICEX index chart as a clue
Similar configurations were seen not so long ago on the charts of the MICEX index. However, it should be noted that the "Triangle" here is not "symmetrical", but "descending" after the uptrend.
Schedule MICEX index can serve as a clue for us, showing how such configurations can work out. Here it is obvious that the positive scenario for the "bulls", even in the presence of technical trump cards, is not in a hurry to develop. Therefore, in case everything is decided in favor of a breakdown of resistance, when buying ALROSA shares, it is necessary to have a reserve of time. Time filters on the breakdown of resistance should be quite large, I believe that it is logical to increase them to five trading sessions. If you have already placed "stop orders" behind the support of the "Triangle", you cannot play with time. "Stops" should be mechanical with a minimum protection time of 5-10 minutes.
I think you have guessed your homework - you need to follow the "Triangle" on ALROSA! But I would like to supplement it with a recommendation to look for configurations similar to what we saw on the MICEX index and their development on other securities.
Other articles about technical analysis figures
- Technical Analysis Figures "Triangles - Symmetrical and Expanding"
- "Flags" and "pennants": features of analyzing figures
- A new look at technical analysis figures
- Expanding formation - a pattern that teaches you not to relax
- The Diamond or Rhombus trend reversal pattern: a dangerous signal for the trader